Report: Online Auction Spending Hits Record Level

By Clare Saliba
Jun 28, 2001 8:28 PM PT

Online auction sites racked up record revenues of US$556 million in May -- a 149 percent
spike from their $223 million in sales in May 2000 -- according to a report released
Thursday by Nielsen//NetRatings and
Harris Interactive.

"Auctions have grown from a niche clientele of collectors to become a mainstream vehicle
for online purchases," NetRatings e-commerce vice president Sean Kaldor said.

The report found that more than 6.2 million consumers conducted online transactions at
auction sites for the month, a 22 percent jump from the 5.1 million that did so in
May 2000.

Moreover, the report said that these surging metrics helped push online auctions up in
rank to the third largest e-commerce category, behind books and apparel.

As a further testament to the popularity of online auction sites, the study also
concluded that online auction revenue claimed a 10 percent stake of overall Internet
spending, climbing from 8 percent a year ago.

Meanwhile, total e-commerce spending for May ballooned 104 percent, to nearly $5.4
billion, from $2.6 billion during the same period last year.

King of the Hill

Leaving its competitors in the dust, Internet auction powerhouse eBay (Nasdaq: EBAY)
generated more than 64 percent of all auction revenues for May, said the report. The San
Jose, California-based company also posted the highest conversion rate, with almost one
quarter of the site's visitors turning into purchasers.

"eBay has done an excellent job converting a very high percentage of their shoppers into
buyers and keeping customers extremely satisfied at the same time," said Kaldor. "This
has enabled them to dominate the online auction category with four times more revenue
than their next closest competitor."

Rising Auctioneer - Egghead?

Rounding out the top three online auctioneers in the Nielsen//NetRatings and Harris
Interactive report were uBid.com, which had a 14.7 percent total revenue share for May,
and Egghead.com (Nasdaq: EGGS), with a 4 percent share of total sales.

Although Amazon.com (Nasdaq: AMZN) and Yahoo! (Nasdaq: YHOO) have worked aggressively
to make their auction offerings viable alternatives to eBay, both sites were dwarfed by
the sector leader. According to the study, Yahoo! Auctions claimed a 2.4 percent share
of total auction revenue, while Amazon Auctions staked a 2 percent share.

Approximately 35,000 Web users were surveyed by Nielsen//NetRatings and Harris
Interactive to collect data for its latest eCommerce Pulse report.

Spreading its Wings

In addition to achieving the greatest reach among online auction sites, eBay has ramped
up efforts to remain at the top of its game. Last month, the firm said it would begin
enforcing a company policy banning links that lead
its users to other Web sites, in an effort to cut down on the number of non-eBay sales
made by buyers and sellers who find each other on eBay.

The company has also made inroads with its other offerings, including the acquisition of
Half.com, which allows users to buy and sell fixed-price merchandise. The May eCommerce
Pulse report data for eBay did not factor in figures for Half.com.

Earlier this month, eBay also
launched its own
fixed-price storefronts category.